The emergence of the FinTech industry is revolutionizing banking and financial services. No longer can conservative institutions rely on past methods to acquire and retain customers. Traditional financial service companies have had to change the approach to both servicing consumers and embracing technology to keep up.
Current trends include a more global focus and an adjustment to technological resources and marketing strategies to compete with Fin Tech companies and prevent the decline in market share. Companies that fail to embrace innovation adequately are rapidly losing market dominance.
For nearly a century, banks and financial institutions implemented conservative business models that rarely changed. FinTech companies, which are not currently subject to the high level of regulation required at traditional banks, have changed the way consumers see financial services. Most FinTech companies only offer online products and services with no expensive branches or customer serving offices to maintain. Opening an account or securing a loan no longer requires a visit to the bank. Even investments and insurance providers face the rapid growth of online capabilities and competition from remote companies.
As consumers embrace new technologies, companies must abandon the old school way of thinking and adjust practices, which includes embracing face paced innovation and technologies. The core of innovations in 2019 includes adapting to analytical and digital processes and creating a seamless customer experience. To succeed, institutions must embrace both technologies and new digital platforms to remain relevant and competitive in today’s marketplace.
Here are a few key trends in the financial industry in 2019
Refining the Target Audience
Financial service companies traditionally established target audiences based on age or financial acumen. For example, a campaign might seek to reach middle-class Millennials or affluent seniors. Today, targeting those general audiences is no longer an effective method of attracting new business or deepening relationships.
In 2019, financial companies are adapting to the use of new technologies and data sets to target individuals based on things like lifestyle, values, mindset, or aspirations. Such methods create a more personal customer experience and relate more closely with the needs of the individual consumer. Such individualized marketing is possible due to the increased availability of real-time data. A company can track nearly any metric from how often they visit the company website, use the mobile app, or purchase history. Using this and other tracking data, companies can monitor consumer behavior and more closely and accurately target consumers on an individual level.
Having access to millions of data points can complicate efficiency. A company must identify the 20% of data, which produces the biggest impact on the bottom line. Decision makers must understand the metrics that build relationships and drive revenue.
In addition to fine-tuning marketing efforts, financial companies now use data to predict future behavior, rather than rely solely on past behaviors. Traditional analytics relied on research studies and reports. Studies could take years to collect and analyze data, and quarterly reports could take months to publish. The slow process limited the ability for banks, lenders, insurance companies, and other financial service companies to create products and services relevant to consumers.
Innovative technology now gives companies’ data in real time. Financial service companies can track customer behavior such as the use of the company app, application history, and which pages of the website they viewed and how long they stayed. Banks and financial companies can track customer movement to the individual, allowing the company to tailor the digital experience.
Utilizing real-time information to enhance the customer experience without overstepping privacy boundaries. Different generations have varying comfort levels with the number of information companies track and maintain.
Physical locations are the most expensive way to provide services, and yet traditional financial companies continue to rely on physical offices to meet customer needs. The answer for most companies is a combination of physical space and remote access to services.
As technology allows consumers to connect with banking services remotely, financial service providers are turning to technology to meet those needs. Solutions often include expanding teller machine capabilities, using Robo advisors to automate investing, and online application capabilities. New technologies provide additional resources for further automation within the financial industry, both inside and outside the physical office.
Innovation is costly and does not always work. New technologies run the risk of system failures or underperformance, which can impact customer loyalty. Customers want progressive companies without the hiccups new technology often brings.
Reforming Physical Branches
Physical offices remain an important element for traditional financial services because it provides the human touch. While customers like the convenience of digital services, they also want the ability to connect with a real person when they have questions or problems.
To appear progressive and innovative companies are upgrading and designing open and inviting spaces and employing new technologies in the process. Office designs focus on efficiency, seamless security while improving the customer experience.
Customers want to see advanced technologies, both in physical offices and online. The old school office environment feels stale and uninviting. However, an open concept design can create challenges for securing customer data and privacy. Whether an employee needs to discuss a confidential account or process paperwork, the company must ensure privacy in an open environment. Security in modern office spaces involves more than locking a storeroom of files.
New digital technologies enable open banking policies. Instead of banks operating as an island, they now must work with other vendors to share and protect consumer data.
Customers want financial companies to share information with third parties for a more seamless experience. Actions might include a consumer requesting a bank to share deposit account information with a spending app or an investor connecting a brokerage account to an investment app. The regulatory agencies require financial companies to secure all consumer data shared with third parties. Partner companies may not be another financial institution with the same regulatory environment.
Such measures can increase the challenge for companies because they offer a more seamless experience while securing all data within the company and during the transfer process.
The rapid pace of technology will continue to revolutionize the financial services industry. To remain competitive in an increasingly digital marketplace, companies must quickly adapt to new technologies or face losing market share.